The problem involving whether to build or buy a cloud-based data platform to serve your workspace’s growing needs involves come complex issues. It’s usually a good idea to start with some basic questions.
Does the Technology Currently Exist?
Not many years ago, creating in-house platforms was a daunting task, requiring months or even years of planning, development, and testing. Now, with dozens of open-source frameworks available, building a enterprise platforms is relatively straught-forward. Need maintenance? Just pick a plan. Certified outsourced development? There’s hundreds of companies to choose from.
I recently showed such a system to a group of entrepreneurs that had just spent a year and “over two hundred thousand dollars” building a commercial real estate market place. CodeCanyon.net had three such systems available, the most expensive of which cost all of US$138.00. A test version was available, so their CTO and I went through it. It was beautifully written and well-documented, had multiple layers of user, permissions and even included the ability to manage a reseller network – something these guys didn’t conceive would be included on their dev roadmap for at least another year.
So unless your requirements are truly revolutionary, the bottom line is: whatever you’re looking for, it’s probably already out there, and available for a one thousandth of the cost to build it from scratch.
Does the technology provide you with a core competitive advantage?
If your roadmap requires this technology to provide the next phase of revenue growth, that doesn’t necessarily mean you shouldn’t kickstart your development by using existing API frameworks or cut and paste solution. We recently invested in a company that is doing highly risk scoring based on proprietary analysis of complex compliance issues. The front end, back end, database, user management, document management, and other components were created from off the shelf components.
The middleware – the business rules that the system uses to compile its FICO-like scores – that comprise the heart of the offering, and the core of the value, have received almost 95% of the development budget to date, which to be, is a smart use of resources.
Is the data safe?
Depending on the type of data in question, no question is likely to cause greater hairloss among CIOs. Every day, new data breaches pop up to remind us that the cloud is a dangerous place.
Can encryption help? Sure – but as Google found out a couple of years back, courtesy of the NSA, encryption only helps if you apply it at the right point in the chain. Stopping data theft also requires that you don’t leave the keys in the ignition.
Then there are the issues involving sovereighty. A few years back I was building a system in South Korea just at the time the rules were changing there regarding storage and retriveal of personal data. Overnight, the transfer of data involving individuals out of South Korea was disallowed and our use of a central database hosted by AWS because illegal.
The basic lessons for me from these situations were, you can’t asume a static data model, and you can’t assume you’re too small, uninteresting, or secure to get hacked.
Are you set up to be a development shop?
One of my friends is highly-experienced CIO at a massive US-based portal. He recently told me he has given up maintaining his own purpose-built CMS in favor of a WordPress integration. When I asked him why, he said he had looked at the total cost of ownership and decided that his organization could be made more profitable by moving away from a home-maintenance approach to a non-proprietary system.
And I guess that response, more than any other, should be the real basis for every other decision analyzed above: does the decision drive more or less profitability?
As the guys with the “C” in our title, it is our responsibility to create valuable assets and maintain profitable businesses. If selecting a “cut and paste” platform does not remove value (or threaten the integrity of the business), and improves profitability, then the decision is clear.
Note: This article was originally reproduced in APAC CIO Outlook magazine.
John is a serial entrepreneur and investor, and the co-founding Partner of Hatcher+, a data-driven, globally-focused venture investment platform based in Singapore. In addition to leading capital raising and deal syndication, he is the visionary and architect behind the Hatcher Stack, the company's proprietary research and technology platform. Over the past five years, John has led numerous venture investments in early-stage companies, including ASYX, DocDoc, Dropsuite, Heardable, Invit, Inzen Studio, SocialCops, ThoughtRiver, and Telr - and syndicated over US$100Mn of additional debt and equity co-investment. IPOs and trade sales in which he was acted for the majority shareholder include Dropsuite (ASX:DSE) and Inzen Studio (ASX:ICI). His M&A work includes the merger of payment leader Telr with Dubai-based Innovate Payments, and the merger of Singapore-based companies DocDoc, and DoctorPage. Prior to co-founding Hatcher, John founded cybersecurity technology leader Authentium (acquired by CYREN in 2010), and acted as a director for global payments aggregator Mozido, and an advisor to Africa-based Gateway Communications, satellite technology developer MDS America, Kuwait-based Internet marketplace Sheeel.com, and Orion Partners, a $2B private equity fund manager based in Hong Kong.
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